Marketing Design and Innovation
Introduction
What is the marketing of innovation?
The Marketing of innovation particularizes the common marketing concepts into the Innovating the marketing process focusing in the decreasing of risks, uncertainty and optimization of resources and utilization of resources.
‘ The American Marketing Association offers the following formal definition: Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stake holders.
Marketing: the big picture
Market design
Market design determines the rules under which market participants work together. I argue that market design can play an important role in promoting innovation. Basically, this is done by establishing rules that build up the incentives for innovation. Enhancing competition is one common way of the market design encourages the innovation. This is seen in all the examples I present in my assignment. Improved price of the information is another. Better price information reduces the innovation risk and improves decisions to innovate the market design. Innovation is also encouraged by identifying other sources of the market failure and then justifying these potential failures through the market rules in market design.
Four Important Applications of Market Design:
(1) Emission allowance auctions,
(2) Airport slot auctions,
(3) Spectrum auctions, and
(4) Electricity markets.
For each I describe how the market design can encourage innovation.
(1) Emission Allowance Auctions- Emission allowance auctions illustrate the important role of the using prices to motivate the innovation. In contrast to control and deal with the approaches to managing pollution, emission allowance auctions- part of limit and operate programs’price the scarce allowances for the various pollutants. Firms can then respond to the prices and make efficient decisions, mutually short term and long term, on how best to reduce emissions. The environmental goal can be achieved at least cost. The objective of the market is to provide reliable price of information for each of the pollutants and enable market participants to purchase the desired collection of allowances. The market design allows for both forward and spot purchase in emission allowance auctions.
(2) Airport Slot Auctions- Airport slot auctions are a chosen method of allocating scarce runway capability at congested airports, such as those serving the New York City. An open auction prices and assigns the scarce runway capability, which has desirable benefits for the investment and operation, as was the case with emission allowances. In addition, an airport slot auction can be planned to persuade competitive entry. The choice of giving airport slots to current carriers and then allowing trade has proved to be unsuccessful. Trades other than exchange transactions among incumbents have not full place. In compare, a well designed auction of airport slots provides a possible opportunity for entrants to secure the slots needed to give an innovative service in airport slot auctions.
(3) Spectrum Auctions- Spectrum auctions have promoted the capable pricing and task of radio spectrum for wireless services. The market design has played a important role in enhancing competition and innovation in wireless services in spectrum auctions. State of the art auction designs allocate the band plan and technology choices to be made by the bidders rather than being set by the controller before the auction. Innovative technologies and the business models can then participate on par with the existing approaches. Technology unbiased auction designs are currently being implemented in the United Kingdom.
(4) Electricity Markets- Electricity market design demonstrates how the product design can play an important role in attractive competition, reducing risks, and promoting innovation on the supply side as well as on the demand side. Wholesale electricity markets are organized as a number of auctions: long term investment markets for capability (or firm energy in the case of hydro systems), medium term auctions for advance energy, and spot auctions for day forward and real time electricity. These markets price is a different type of variety of products at different times and places. Good designs moderate market authority problems that commonly can occur, especially during times of scarceness. Advance capability auctions coordinate the efficient investment in new capability. In addition, by bundling a call option to provide power at prices above a strike price, the auction greatly mitigates incentives to exercise market power during times of spot scarceness. He advance energy market provides an extra evade to customers 114 Cram ton at minor energy prices. The two markets collective go a long way toward eliminating market authority in the spot market, improving the convey of energy resources. The product description in the onward energy market can also persuade innovation on the demand side. Customers with hourly meters can be hedged for their estimated energy purchase, thereby reducing risk, yet exposed on the margin to the hourly price. This coverage motivates demand reaction and investment in innovative demand management systems.
Auction applications are very quickly expanding. Communication and computational advances have positively played an important role, but the development of easy and powerful auction methods has been important too. Market designers now include a much comfortable set of tools to address more difficult problems.
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Marketing Innovation
The marketing innovation develops the marketing philosophy all across the innovating Process from the stabilizing of the climate encouraging to the arising of the ideas with the customer wants and needs satisfaction as an indisputable purpose to the control of the results of the innovation launching.
Innovation can be described as the capability to create something new such as a process, tool or thought. Therefore innovation relates to the application of much better solutions which can correctly assemble the unarticulated needs, new necessities or the offered market needs. This is fulfilled through more capable technologies, products, services, thoughts or processes that are easily available to in the society, government and markets. Innovation therefore refers to the formation of something creative and new which can satisfy the needs of the market or the society. The best example of the product invention can be cited from the example of the creation of iPod by the multinational corporation (MNC) of California, Apple Inc. developer and seller of consumer electronics, personal computers, online services and computer software. Steve Jobs who was the CEO of the company successfully supported all the process of inventions and innovations with the reason of attractive of the company to the pinnacle of the hardware as well as the software industry (Apple Inc, 2014). The greatest line of hardware products of the company are Mac lines of computer, iPod, iPhone and iPad tablet form of the computers. Further the Mac line of the computers, iPod is by far one of the best inventions of Apple (Delany, et al., 2002). The project highlights details about the invention of the iPod by Apple and the way innovations are accepted out for the same in arrange to suit the changing of the consumer’s requirements.
Role of Design in the Innovation Process
‘Creativity is defined ‘ as the production of the new ideas that are fit for a particular business purpose in innovation’ (DTI, 2005)
”Design is what links creativity and innovation. It shapes ideas to become realistic and attractive propositions for the users or customers. Design may be described as creativity deployed to a specific end for design’ (Cox Review, 2005)
Creativity generates new thoughts, design shapes thoughts and innovation exploits ideas.
Interactive model of innovation
Summary of the New Product Development Decision Process
New product development decision process in important for innovation. The development of unique products, product improvements, product modifications and new brands throughout the firm’s own Research and Development efforts.
Objectives of the Technique
The objective of the technique is the successfully launching of new products and services
helping the enterprise to survive in the actual changing of the environment. The final goal should be reached by assuming innovation (in an aware and programmed way) creating mechanisms and using the tools we describe in this study of innovation process. The final aim is the consecution of a well balanced portfolio of innovations (product/service) placed in the sequential phases of the cycle of life (introduction, maturity and declining) that going on with the natural process will change the products that disappear at the other side of the curve (died products). The procedure goes on beyond the negative side of the time axis. It considers the preceding time to the launching of the product and takes into account the products from the moment of the idea definition.
Description / structure of the methodology / alternative solutions
The team
The function of the methodology is a living process. It must be feed by minimum human structure (the size of the team will be depending on the peculiarities of the SME. The success depends upon the acceptation, for the complete firm and the top management. If it is does not exist this smallest team, motivated and motivating, the innovation will be fail.
The process
The team will be having enough decision capability in the implicated functional areas: Engineering, production, marketing, finances purchasing. The marketing activities are parallel to all the steps from the design to the market launch as we convey in the graphic Development of the Marketing Plan. In the right column of the figure are written the marketing actions to be accomplished simultaneously with the development of the new products in this process.
The cost generated by the subsequent phases of the feasibility study realized to encourage the achievement and reduce the risk increases exponentially as it goes on and the reject becomes more expensive. That is why it must be considered the acceptation of the idea from the part of the consumer by using all the disposable tools and products. The focalization on the customer wants and needs, all along the process is needed to be sure of the success of the innovation in this process.
Categories of New Products
New Product Development Decision Process
Development of a Marketing Plan
Invention and innovation of iPod
The iPod can be described as the portable media player which is designed by the as well as marketed by Apple. The first line of iPod was marketed on 2001, which is almost eight months after the iTunes, a Macintosh version was released. Then, iPod was made-up from the category of digital center while the organization was involved in the formation of software for the more and more growing marketplace of personal or individual digital devices. The development of software by Apple was not accepted out internally instead the suggestion platform on the basis of two ARM cores of Portal Player was utilized by the company. In addition, Apple also contracted another organization named Pixo for the design and implementation of the user interface. The whole process was approved out under the direction and supervision of Steve Jobs (Carlo, et al., 2014). With the progress of the process of development, of the company also refined the appearance and feels of the software. Hence, after inventing the product, Apple also worked hard to take in the latest innovation in the iPod’s (Camis”nandVillar-L”pez, 2014).
Development of Product
The various forms of the iPod created till dates are Classic, Mini, Nano, Shuffle and Touch. The three recent versions of iPod are the very compacted iPod shuffle, followed by the compressed edition of iPod Nano and lastly the touch screen based iPod Touch. With the change in the consumer demands and technology Apple continuous the process of innovation in development of the product. The capability of the iPods differs with the models. The storage ability for iPod Shuffle is 2GB while that of iPod Classic is 160 GB.
Competitive Analysis and Marketing Aspects
Apple retained the required competitiveness throughout the right separation and positioning of the market offering. Besides to, managed the life cycle through effective strategies the organization also developed new products, designed strategies to be competitive with the market challengers, leaders, niches and followers. The organization also managed and designed the global marketing strategies most effectively (Ceylan, 2013)in market analysis. Thus, the multinational organization abided by the primary principles as stated by Kotler. The competitors of Apple received tough competition because of the excellent strategies formulated by the technology giant in competitive analysis. The key competitors of the company in terms of the production as well as the sales of the portable media player are Sony and Philips correspondingly (Cherunilam, 2010). While both the companies are also reasonably popular brand, Apple tops of the list as the company is the inventor and seller of innovative iPods which consists of much extra features as compared to that of Sony and Philips. Sony and Philips sell low cost media players but the brand value and quality of the Apple iPods makes the company of the market leader. Apple gives primary importance to the quality more than price (Jensen, 2001). The invention and stable innovations of the iPod is the evidence of the same in competitive analysis. Besides to, the iPods of the Apple have are now sold globally at most competitive prices (Bartholomew, 2001). The strategy supports the company to sustain in the market more and more. The media players of the competitors of the Apple only fulfilled the basic needs of the consumer but the iPod has features such as excellent software, video conferencing, camera and have regularly a smooth look which distinguishes it to the others (Cho, Lee and Pfeiffer Jr., 2013). But, the Apple has retained the brand value successfully till date in terms of production and sales of iPod (Jensen, 2001).
Conclusion
Design is important for the innovation and invention
Innovation is the well measured in Community Innovation Survey
It concludes that Apple is a multinational corporation which frequently brings in the required invention and innovation in the products produced to the consumers (Hendry, 2000). Since the very preface of the iPod the organization maintained regularly inventions to suite the changing global demand and maintains the competitiveness in the market (Kiron, et. al., 2013). Since the invention and innovation of the iPod the rate of sales for the same has remained quite unchanged. The market competitors also got affected because of the extreme effectiveness of research and development of products carried out by the company. The marketing strategy is also quite proficiently developed by Apple as the organization added dissimilar features slowly to the iPods produced the till date. The invention and innovation strategy of Apple is therefore quite forceful and important.